Legal challenge brewing over delay in key crop insurance provision

WASHINGTON, Aug. 27, 2014 – USDA’s decision to delay implementation of a key crop insurance change - included in the 2014 Farm Bill - could end up in the courts.

Oklahoma City trial lawyer Jeff Todd told Agri-Pulse he is “looking into several different ways to protect the legal rights of producers” who will be adversely impacted by the failure of USDA’s Risk Management Agency to implement the Actual Production History (APH) as mandated by the 2014 Farm Bill. Our sources noted that a Washington, D.C.-based firm is also talking to producers about potential legal action, but we could not confirm the name of the firm as we went to press. No action is expected until after September 30.

Todd serves as co-chair of McAfee & Taft’s Agriculture and Equine Industry Group and has successfully litigated several crop insurance cases in the past.

Rumors have been flying across drought-ravaged sections of the Texas, Oklahoma, New Mexico, Colorado, Kansas and California that some type of legal action was in the works, including the potential for an injunction that would prohibit USDA from implementing other parts of the Farm Bill until the APH adjustment is included.

Todd said he “doesn’t think a lawsuit is out of the question,” but that he is “weighing the options” and will “ultimately do whatever is best for our producers.”

For some producers in the Southwest U.S., crop insurance is really the only thing they get out of the farm bill, Todd explains. “Failure to implement this APH provision impacts producers ability to purchase workable crop insurance, the ability to get operating loans and, potentially, the ability to collect indemnities.”

Under the new Farm Bill, a producer may choose to exclude any year from their APH if his or her yield in that year is less than 50 percent of the 10-year county average. Additionally, the final provision is retroactive, enabling a change not just to future yields, but also to the previous 10 years that can be used to calculate a producers' APH.

David Cleavinger, a Texas Wheat Producers Association (TWPA) board member who farms near Wildorado, Texas, says that without this APH change, his crop insurance coverage will continue to erode after years of devastating drought.

“I haven’t harvested an acre of dryland wheat since 2010,” Cleavinger said. “I ran very conservative figures on one dryland wheat section in Deaf Smith County, and by dropping the yields from three qualifying years, I would be able to increase my APH from 23 bushels per acre, to 28.” At $6.50 wheat, the adjustment would correspond to $32.50 per acre of crop insurance coverage that he is not eligible for now but would have been under average growing conditions.

During a House Committee on Agriculture hearing on July 10, Chairman Frank Lucas, R-Okla., expressed frustration about USDA’s intention to delay implementation until 2015.

Rep. Mike Conaway, R-Texas, told USDA Under Secretary Michael Scuse that he was “deeply troubled” by the failure to make this change in 2014 because it “would provide critical relief for those struggling against severe drought.”

“Producers suffering from a drought shouldn't have to wait until the third year of a five-year Farm Bill to receive relief, particularly when Congress intended for it to be available immediately,” Conaway noted.

Scuse said an APH adjustment included in the Farm Bill to help farmers affected by drought and other disasters in recent years will be available for crops planted in the fall of 2015, but not for crops harvested before then. Scuse said “it's no small effort” to adjust the APH, which requires going over 20 years of data “for every single county for every single crop in that county.”

While Scuse did not commit to implement the provision earlier than the fall of 2015, he did promise to investigate and provide the committee with details about potential timelines, and even to consider a partial implementation for crops most impacted by drought, according to Conaway.

But during an Aug. 6 press conference, Agriculture Secretary Tom Vilsack told reporters that USDA cannot plan to implement the provision sooner, because the department has to select some programs to handle first.

“It's the best we could under the circumstances,” he said, because USDA decided to move forward with Commodity Title provisions. “It was a staffing issue. It comes down to that.”

While noting the tremendous progress that USDA has made on many other parts of the farm bill, Vilsack said recalculating APH is very “labor and staff intensive” because it requires computations on every commodity and every county.

Asked about a partial implementation of the APH provision, Vilsack said this may not be feasible.

“If you're going to single out counties or commodities...how do you draw the line?” he said.

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The world of agriculture extends beyond what’s growing in your field or living in your barn, and here at Agri-Pulse, we understand that. We make it our duty to inform you of the most up-to-date agricultural and rural policy decisions being made in Washington D.C. and examine how they will affect you – the farmer, the lobbyist, the government employee, the educator, the consultant and the concerned citizen.